updated 01:35 pm EST, Thu December 18, 2008

Cellphone market slowdown

Market research and analyst company IDC announced on Thursday it believes the global economic plunge will have an adverse effect on cellular phone shipments in 2009, declining overall by 1.9 percent worldwide and 8.7 percent in the US compared to 2008 levels. IDC analysts point to recent announcements by top two phone manufacturers Nokia and Samsung, suppliers, and operators that all foresee lower volumes of phones shipped in 2009. Mobile phone chipmakers Qualcomm, Texas Instruments and MediaTek are just some of the major named suppliers that have already announced reductions in manufacturing for 2009.

The decrease will be the first since 2001 year-to-year, when sales decreased by 2.3 percent. Since then, the cellular phone market grew by the double digits every year thanks to emerging markets that included smartphones. IDC expects global cell phone sales growth to be 7.1 percent in 2008 before shrinking in 2009.

IDC names consumer spending habits as another reason why the sales will decrese. The IDC believes uncertain economic conditions will push customers to hold on to their money and current devices longer and thus more likely to upgrade hardware only when they lose it, break it or exit their contracts. By 2010, however, the IDC expects economic recovery plans to come into effect and consumers start spending again, also partly due to the delay.

IDC goes on to say not all segments will see a decline, as smartphone sales are expected to grow worldwide by 8.9 percent in 2009 and 3.1 percent in the US.